Natixis Global Asset Management is seeking new business from UK independent financial advisers by teaching them how to advise clients – while aiming to stay on the right side of regulators.

Hailer: affiliate managers are key to success at Natixis

Ed Farrington, managing director of key Natixis accounts, said: “Clients should not avoid risk if they want a good return. But they also need to be aware what they are taking on. Education has never been more important.”

Natixis Global, which manages $350bn, will not charge for offering advisers a tutoring service, but it hopes to win business from them later on, assuming its products pass the quality test.

Behaviour theory confirms reciprocity is a powerful incentive for people to act in this way.

Natixis Global, backed by French banking group BPCE, has made its move following the introduction of the UK retail distribution review this year.

This has stopped managers paying commissions to independent financial advisers in return for business.

To make money, IFAs need to negotiate charges with clients, who will expect a better level of service by way of return.

A survey by Allianz Global Investors suggests investors are reluctant to pay meaningful sums to advisers for investment advice. About 32% of respondents are unwilling to pay anything at all.

According to Allianz, many retail investors had not been aware they were not paying for their investment service.

Hargreaves Lansdown runs Britain’s leading internet investment platform and earns fees from providing an internet platform for retail investors. Last week it confirmed a 42% increase in net inflows to £1.65n in the half year to December. It said the gains resulted from investors being unwilling to foot the bill for investment advice following the RDR.

The Financial Services Authority does not want to see a bias among advisers to the managers that educate them.

A rival manager of Natixis said: “I would expect the FSA to check whether managers have benefited to a disproportionate extent.”

An FSA spokeswoman confirmed it was investigating the best way to proceed.

According to advisers, however, the FSA should decide that advisers can be tutored by managers, as long as the advice remains truly independent and consumers become better informed.

This is common in the US, where State Street, among others, educates advisers on ETFs through its SPDR University service.

One UK adviser said: “Managers helping close the gap through advice to IFAs provided free should be considered a good thing, as long as advisers keep their objectivity.”

Natixis’s Farrington stresses his advice is not contingent on being offered business.

Natixis Global chief executive John Hailer said education had helped win him plenty of business since his appointment as chief executive in 1999. This followed the arrival of US registered investment advisers, or RIAs, who rapidly gained market share when the technology bubble burst and undermined the reputation of commission-driven brokerages.

To compete with brokerages, RIAs needed to get up to speed with good investment techniques. Natixis Global helped them bridge the educational gap and gained business.

Hailer said: “We’re near the top of the league tables, thanks to our affiliate managers. Our technique wouldn’t work if they weren’t successful.”

Natixis Global explains such strategies as helping RIAs to find ways to dampen the volatility of client portfolios.

Alternatives comprised 16% of US mutual fund sales last year, reflecting the firm’s success in educating advisers on this topic.

One of Hailer’s best-performing affiliates is bond manager Loomis Sayles, led by Dan Fuss, who co-manages a new multi-sector income fund developed for the UK.

Natixis also backs equity manager Harris Associates and real estate firm AEW. Last year, the French arm of the business incorporated a business called Seeyond, which offers structured and volatility products.

--This article first appeared in the print edition of Financial News dated February, 18, 2013